KeyCorp (KEY) 8-K Keycorp Reports Fourth Quarter 2013

KeyCorp

Fourth Quarter 2013 Earnings Review

January 23, 2014

Beth E. Mooney

Chairman and

Chief Executive Officer

Don Kimble

Chief Financial Officer

Exhibit 99.2

2

FORWARD-LOOKING STATEMENTS AND ADDITIONAL

INFORMATION DISCLOSURE

This presentation contains forward-looking statements, including statements about our financial condition, results of operations, asset quality trends,

capital

levels

and

profitability.

Forward-looking

statements

can

often

be

identified

by

words

such

as

“outlook,”

“goal,”

“objective,”

“plan,”

“expect,”

“anticipate,”

“intend,”

“project,”

“believe,”

or “estimate.”

Forward-looking statements represent management’s current expectations and

forecasts regarding future events. If underlying assumptions prove to be inaccurate or unknown risks or uncertainties arise, actual

results could vary materially from these projections or expectations.

Risks and uncertainties include but are not limited to: (1) deterioration of commercial real estate market fundamentals; (2) declining asset prices; (3)

adverse changes in credit quality trends; (4) changes in local, regional and international business, economic or political conditions; (5) the extensive

and increasing regulation of the U.S. financial services industry; (6) increasing capital and liquidity standards under applicable regulatory rules; (7)

unanticipated changes in our liquidity position, including but not limited to, changes in the cost of liquidity, our ability to enter the financial markets and

to secure alternative funding sources; (8) our ability to receive dividends from our subsidiary, KeyBank; (9) downgrades in our credit ratings or those

of

KeyBank;

(10)

operational

or

risk

management

failures

by

us

or

critical

third-parties;

(11)

breaches

of

security

or

failures

of

our

technology

systems

due to technological or other factors and cybersecurity threats;

(12) adverse judicial proceedings; (13) the occurrence of natural or man-made

disasters or conflicts or terrorist attacks; (14) a reversal of the U.S. economic recovery due to economic, political or other shocks; (15) our ability to

anticipate interest rate changes and manage interest rate risk; (16) deterioration of economic conditions in the geographic regions where we operate;

(17)

the

soundness

of

other

financial

institutions;

(18)

our

ability

to

attract

and

retain

talented

executives

and

employees,

to

effectively

sell

additional

products

or

services

to

new

or

existing

customers,

and

to

manage

our

reputational

risks;

(19)

our

ability

to

timely

and

effectively

implement

our

strategic initiatives; (20) increased competitive pressure due to industry consolidation; (21) unanticipated adverse effects of acquisitions and

dispositions of assets or businesses; and (22) our ability to develop and effectively use the quantitative models we rely upon in our business planning.

We provide greater detail regarding these factors in our 2012 Form 10-K and subsequent filings, which are available online at www.key.com/ir and

www.sec.gov. Forward looking statements speak only as of the date they are made and Key does not undertake any obligation to update the forward-

looking statements to reflect new information or future events.

This

presentation

also

includes

certain

Non-GAAP

financial

measures

related

to

“tangible

common

equity,”

“Tier

1

common

equity,”

“pre-provision

net

revenue,”

“cash

efficiency

ratio,”

and

“adjusted

cash

efficiency

ratio.”

Management

believes

these

ratios

may

assist

investors,

analysts

and

regulators

in analyzing Key’s financials. Although Key has procedures in place to ensure that these measures are calculated using the appropriate GAAP or

regulatory

components,

they

have

limitations

as

analytical

tools

and

should

not

be

considered

in

isolation,

or

as

a

substitute

for

analysis

of

results

under GAAP. For more information on these calculations and to view the reconciliations to the most comparable GAAP measures, please refer to the

Appendix to this presentation or our most recent earnings press release. Reconciliations to the most comparable GAAP measures for 1Q13 and

2Q13

Non-GAAP

financial

measures

are

available

in

our

second

quarter

2013

earnings

press

release.

All

of

the

foregoing

are

accessible

on

Key’s

website at www.key.com/ir.

3

Grew commercial and consumer loans

Total average loans up 5% from 2012, driven by CF&A up 12%

Net interest income up 3% from prior year

Fifth straight year of growth for investment banking and debt placement fees

Benefitted from investments: cards and payments income up 20%; mortgage

servicing revenue more than double prior year

Implemented $241 million in annualized savings

Optimized staffing; 2013 FTE down 5% from 2012

Consolidated 62 branches in 2013; 81 total, or approximately 8% of the

franchise since the launch of our efficiency initiative

Improve

Efficiency

Repurchased $474 million of common shares in 2013; $99 million in 4Q13

2013 total shareholder payout of 76%

Committed to capital priorities: organic growth, dividends, repurchases,

opportunistic growth

Optimize and

Grow

Revenue

Investor Highlights –

2013

Execution of strategy and differentiated business model driving results

Effectively

Manage

Capital

4

Financial Review

*

**

**

*

*

*

*

*

*

*

5

Financial Highlights

TE = Taxable equivalent, EOP = End of Period

(a)

From continuing operations

(b)

Year-over-year average balance growth

(c) 

From consolidated operations

(d)

12-31-13 ratios are estimated

(e)

Non-GAAP measure: see Appendix for reconciliation; 2Q13 and 1Q13 reconciliations are available in our 2Q13 earnings press release, available         

on our website: www.key.com/ir

(f)

Efficiency initiative charges include pension settlement in 3Q13

and 4Q13

Metrics

4Q13

3Q13

2Q13

1Q13

4Q12

EPS –

assuming dilution

$  .26

$  .25

$  .21

$  .21

$  .20

Cash efficiency ratio

(e)

67.4

%

67.5

%

69.1

%

66.0

%

69.0

%

Adj. cash efficiency ratio (ex. initiative charges

(f)

)

(e)

65.1

63.6

65.4

64.5

67.5

Net interest margin (TE)

3.01

3.11

3.13

3.24

3.37

Return on average total assets

1.08

1.12

.95

.99

.96

Total loans and leases

3

%

5

%

7

%

6

%

7

%

CF&A loans

8

11

14

16  

21

Deposits (excl. foreign deposits)

8

5

8

7

7

Tier 1 common equity

(d), (e)

11.2

%

11.2

%

11.2

%

11.4

%

11.4

%

Tier 1 risk-based capital

(d)

12.0

11.9

11.9

12.2

12.2

Tangible common equity to tangible assets

(e)

9.8

9.9

10.0

10.2

10.2

NCOs to average loans

.27

%

.28

%

.34

%

.38

%

.44

%

NPLs to EOP portfolio loans

.93

1.01

1.23

1.24

1.28

Allowance for loan losses to EOP loans

1.56

1.62

1.65

1.70

1.68

Financial

Performance

(a)

Balance

Sheet   

Growth

(a),

(b)

Capital

(c)

Asset

Quality

(a)

6

4Q13 total average loans up 3% from the prior

year; up 5% excluding the exit portfolio

–

Driven by CF&A up 8% in 4Q13 from 4Q12

Average loans up 1% unannualized from 3Q13 with

period-end loans up 2%

Total commitments up, with utilization relatively

stable

High quality new loan originations: consistent with

moderate risk profile

Loan Growth

Highlights

Average Commercial, Financial & Agricultural Loans

CF&A loans

Utilization rate

Average Loans

Exit Portfolios

Home Equity & Other

Total Commercial

7

Improving Deposit Mix

Highlights

Funding Cost

Overall funding cost continues to improve, with

total deposit cost declining to 20 bps

Transaction deposit balances up 11% from 4Q12

Total CD maturities and average cost

–

2014 Q1: $1.6 billion at .65%

–

2014 Q2: $1.2 billion at 1.36%

–

2014 Q3: $1.0 billion at 1.62%

–

2014 Q4: $.6 billion at .86%

–

2015 and beyond: $1.9 billion at 1.75%

Average

Deposits

(a)

$ in billions

(a)

Excludes deposits in foreign office

(b)

Transaction deposits include noninterest-bearing, and NOW and MMDA

Cost of total deposits

(a)

Interest-bearing liability cost

CDs and other time deposits

Savings

Noninterest-bearing

NOW and MMDA

8

Net Interest Income and Margin

TE = Taxable equivalent

Continuing Operations

Highlights

Net Interest Income (TE) & Net Interest Margin (TE) Trend

Net interest income up 1% from 3Q13

–

Relatively stable excl. the impact of leveraged

lease terminations, which reduced net interest

income by $8 MM in 3Q13 and $2 MM in 4Q13

Net interest margin down 10 bps from prior quarter

–

Result of higher levels of liquidity

–

Larger than anticipated deposit inflows

Compared to prior year, net interest income and

margin were impacted by asset repricing, swap

terminations and leveraged lease terminations

Maintaining moderate asset sensitive position

–

Naturally asset sensitive balance sheet:

approximately 70% of loans variable rate

–

High quality investment portfolio with average

life of 3.6 years

–

Flexibility to quickly adjust interest rate risk

position through use of swaps

NIM Change (bps):

vs. 3Q13

Increased liquidity

(.11)

Loan yield and mix

(.02)

Interest rate risk management / swaps

(.02)

Leveraged lease terminations 4Q13 vs. 3Q13

.03        

Deposit pricing / mix

.02

Total Change

(.10)

Net interest income (TE)

NIM (TE)

$ in millions

9

Noninterest Income

TE = Taxable equivalent

Continuing Operations

Highlights

Noninterest Income

Core fee income businesses showing strength

–

Excl. gains from leveraged lease terminations

(a)

,

noninterest income is up 2% from prior year and up

3% from prior quarter

Benefitting from investments

–

Five consecutive years of growth for investment

banking and debt placement

–

Cards and payments income up 20% in 2013

–

Mortgage servicing revenue more than double FY12

Investment Banking & Debt Placement Fees

Noninterest Income Components

$ in millions

$ in millions

(a)

Excludes gains resulting from the early termination of leveraged

leases amounting to $23 MM in 3Q13 and $4 MM in 4Q13

(b)

Other includes corporate-owned life insurance, principal investing, etc.

Leveraged lease termination gains

TruPS gains

$ in millions

10

Focused Expense Management

Noninterest Expense

$ in millions

Highlights

Noninterest Expense

(a)

Non-GAAP measures: see Appendix for reconciliation

(b)

Excludes one-time gains of $54 million related to the redemption of trust preferred securities

(c)

Efficiency initiative charges includes pension settlement in 3Q13 and 4Q13

Efficiency Ratio

(a)

Expenses down 3% from prior year and 1% from

prior quarter

Compared to prior quarter, expenses impacted by:

–

Lower efficiency initiative and pension settlement

charges (down $17 MM)

–

Increased incentives and business services and

professional fees (up $11 MM)

Implemented $241 MM in annualized savings

–

Efficiency charges of $24 MM in 4Q13

11

Nonperforming Assets

Net Charge-offs & Provision for Loan and Lease Losses

NPLs

NPLs to period-end loans

NCOs

Provision for loan and

lease losses

NCOs to average loans

$ in millions

$ in millions

NPLs held for sale,

OREO & other NPAs

Continued Improvement in Asset Quality

Highlights

Net loan charge-offs decreased 36% from 4Q12 to

$37MM, or 27 bps of average loans 

4Q13 commercial loan net charge-offs were $2MM

or 2 bps of average loans

Gross charge-offs down $12MM or 15% from 3Q13

Net charge-offs expected to be at the lower end of

or below the targeted range

Allowance for Loan and Lease Losses

Allowance for loan and

lease losses to NPLs

Allowance for loan

and lease losses

$ in millions

12

Disciplined execution of capital plan

Repurchased $99 million in common shares

during 4Q13

Estimated Tier 1 common equity ratio under the

Regulatory Capital Rules of 10.6%

(a), (b)

Tier 1 Common Equity

(b), (c)

Tangible Common Equity to Tangible Assets

(b)

Strong Capital Ratios

Highlights

Book Value per Share

(a)

Based upon December 31, 2013 pro forma analysis; see Appendix for further detail

(b)

Non-GAAP measure: see Appendix for reconciliations

(c)

12-31-13 ratio is estimated

2014 Outlook and Expectations

Loans

•

Mid-single digit average balance growth

Net Interest

Income

•

Relatively stable from 2013

Noninterest

Income

•

Low single-digit growth compared to prior year

Expense

•

Low single-digit percentage decline from 2013

Efficiency /

Productivity

•

Positive operating leverage

Asset Quality

•

At the lower-end or below targeted range of 40 –

60 bps of net

charge-offs to average loans

Capital

•

Remaining net share repurchase authority of approximately      

$90 million for 2013 CCAR

•

2014 capital plan announcement expected in March

13

Guidance ranges:   relatively stable: +/-

2%;   low single-digit: <5%;   mid-single digit: 4% -

6%

14

Appendix

*

*

*

*

*

*

*

*

*

Progress on Targets for Success

Focus areas

Metrics

(a)

4Q13

3Q13

Targets

Improving balance

sheet efficiency

Loan to deposit ratio

(b)

84%

84%

90-100%

Maintaining

moderate risk

profile

NCOs to average loans

.27%

.28%

40-60 bps

Provision to average loans

.14%

.21%

Growing high

quality, diverse

revenue streams

Net interest margin

3.01%

3.11%

>3.50%

Noninterest income

to total revenue

43%

44%

>40%

Generating

positive operating

leverage

Adj. cash efficiency ratio

(ex. efficiency initiative

charges)

(c)

65%

64%

60-65%

Strengthening

returns with

disciplined capital

management

Return on average assets

1.08%

1.12%

1.00-1.25%

(a) 

Continuing operations, unless otherwise noted

(b)

Represents period-end consolidated total loans and loans held for sale (excluding education loans in the securitization trusts)

divided by period-end consolidated total deposits (excluding deposits in foreign office)

(c)

Excludes intangible asset amortization; non-GAAP measure: see Appendix for reconciliation

15

16

Average Total Investment Securities

Highlights

Average AFS securities

High Quality Investment Portfolio

Portfolio composed of Agency or GSE backed

CMOs: Fannie, Freddie & GNMA

–

No private label MBS or financial paper

Average portfolio life at 12/31/13 of 3.6 years

compared to 3.8 years at 9/30/13

Securities cash flows of $.9 billion in 4Q13     

and $1.3 billion in 3Q13

Yields on purchases were 78 bps lower than

4Q13 maturities

Securities to Total Assets

(b)

(a)  Yield is calculated on the basis of amortized cost

(b)  Includes end of period held-to-maturity and available-for-sale securities

Average yield

(a)

Average HTM securities

17

Asset Quality Trends

Quarterly Change in Criticized Outstandings

(a)

Delinquencies to Period-end Total Loans

(a)

Loan and lease outstandings

(b)

From continuing operations

30 –

89 days delinquent

90+ days delinquent

Metric

(b)

4Q13

3Q13

2Q13

1Q13

4Q12

Delinquencies to EOP total loans: 30-89 days

.58

%

.54

%

.47

%

.70

%

.80

%

Delinquencies to EOP total loans: 90+ days

.13

.17

.15

.16

.15

NPLs to EOP portfolio loans

.93

1.01

1.23

1.24

1.28

NPAs to EOP portfolio loans + OREO + Other NPAs

.97

1.08

1.30

1.34

1.39

Allowance for loan losses to period-end loans

1.56

1.62

1.65

1.70

1.68

Allowance for loan losses to NPLs

166.9

160.4

134.4

137.4

131.8

Continuing Operations

Continuing Operations

Period-

end loans

Average

loans

Net loan

charge-offs

Net loan 

charge-offs

(b)

/

average loans

(%)

Nonperforming   

loans

(c)

Ending

allowance

(d)

Allowance /

period-end

loans

(d)  

(%)

Allowance /

NPLs

(%)

12/31/13

4Q13

4Q13

4Q13

12/31/13

12/31/13

12/31/13

12/31/13

Commercial, financial and agricultural

(a)

$   24,963

$   24,218

$              9

.15

$                    77

$             362

1.45

470.13

Commercial real estate:

Commercial Mortgage

7,720

7,678

(5)

(.26)

37

165

2.14

445.95

Construction

1,093

1,075

1

.37

14

32

2.93

228.57

Commercial lease financing

4,551

4,513

(3)

(.26)

19

62

1.36

326.32

Real estate –

residential mortgage

2,187

2,199

6

1.08

107

37

1.69

34.58

Home equity

10,674

10,653

13

.48

220

95

.89

43.18

Credit cards

722

701

5

2.83

4

34

4.71

850.00

Consumer other –

Key Community Bank

1,449

1,446

5

1.37

3

29

2.00

966.67

Consumer other –

Exit Portfolio

1,098

1,125

6

2.12

27

32

2.91

118.52

Continuing total

(e)

$   54,457

$    53,608

$            37

.27

$                  508

$             848

1.56

166.93

Discontinued operations

4,497

4,663

9

1.34

25

39

1.54

156.00

Consolidated total

$   58,954

$    58,271

$            46

.32

$                  533

$             887

1.56

166.42

Credit Quality by Portfolio

Credit Quality

(a)

12-31-13

ending

loan

balances

include

$94

million

of

commercial

credit

card

balances;

12-31-13

average

loan

balances

include

$97

million

of

assets

from

commercial

credit

cards

(b)

Net

loan

charge-off

amounts

are

annualized

in

calculation.

NCO

ratios

for

discontinued

operations

and

consolidated

Key

exclude

education

loans

in

the

securitization

trusts

since

valued

at

fair-market

value

(c)

12-31-13

and

9-30-13

NPL

amounts

exclude

$16

million

and

$18

million

respectively

of

purchased

credit

impaired

loans

acquired

in

July

2012

(d)

12-31-13

allowance

by

portfolio

is

estimated.

Allowance/period

loans

ratios

for

discontinued

operations

and

consolidated

Key

exclude

education

loans

in

the

securitization

trusts

since

valued

at

fair-market

value

(e)

12-31-13

ending

loan

balances

include

purchased

loans

of

$166

million

of

which

$16

million

were

purchased

credit

impaired

$ in millions

18

Vintage (% of Loans)

Loan

Balances

Average

Loan Size ($)

Average

FICO

Average

LTV

(a)

% of Loans

LTV>90%

2012

and

later

2011

2010

2009

2008

and

prior

Loans and lines

First lien

$     

6,007

$       

68,571

766

67

%

.6  

%

43

%

6%

4

%

4

%

43%

Second lien

4,323

47,518

761

76

3.3

27

6

4

4

59

Community Bank

$        

10,340

57,833

764

71

1.8

35

6

4

4

51

Exit portfolio

334

22,728

729

80

31.1

-

-

-

-

100

Total home equity portfolio

$        

10,674

Nonaccrual loans and lines

First lien

$           

106

$        

57,353

713

73

%

.5%

3

%

3%

3

%

6

%

85%

Second lien

99

47,112

710

78

3.1

1

2

2

3

92

Community Bank

$            

205

51,893

712

76

1.5

2

3

2

4

89

Exit portfolio

15

23,647

704

79

30.6

-

-

-

-

100

Total home equity nonaccruals

$            

220

Fourth quarter net charge-offs (NCOs)

Community Bank

$               

10

1

%

1%

3

%

2

%

93%

% of average loans

.38

%

Exit Portfolio

$               

3

-

-

-

-

100

% of average loans

3.47

%

(a) Average LTVs are at origination. Current average LTVs for Community Bank total home equity loans and lines is approximately 73%,

which compares to 74% at the end of the third quarter 2013.

Home Equity Portfolio –

12/31/13

$ in millions, except average loan size

Home Equity Portfolio

Highlights

High quality portfolio

Community bank loans and lines: 97% of total portfolio; branch-

originated

–

58% first lien position

–

Average FICO score of 764

–

Average LTV at origination: 71%

$3.9 billion of the total portfolio are fixed rate loans that require

principal and interest payments; $6.8 billion are lines

$1.3 billion in lines outstanding (12% of the total portfolio)

come to end of draw period in the next four years

–

Proactive communication and client outreach initiated

near end of draw period

19

Balance Outstanding

Change

Net Loan Charge-offs

Balance on

Nonperforming Status

12-31-13

9-30-13

12-31-13 vs.           

9-30-13-

4Q13

(c)

3Q13

(c)

12-31-13

9-30-13

Residential properties –

homebuilder

$          20

$          26

$            (6)

-

-

$           7           $        8

Marine and RV floor plan

24

25

(1)

-

-

6

6

Commercial lease financing

(a)

782

796

(14)

$        (2)

$        (2)

-

1

Total commercial loans

826

847

(21)

(2)

(2)

13

15

Home equity –

Other

334

353

(19)

3

2

16

14

Marine

1,028

1,083

(55)

5

1

26

25

RV and other consumer

70

71

(1)

1

-

1

2

Total consumer loans

1,432

1,507

(75)

9

3

43

41

Total exit loans in loan portfolio

$     2,258

$     2,354

$          (96)

$         7

$         1

$         56          $      56

Discontinued operations –

education lending

business (not included in exit loans above)

(b)

$    4,497

$    4,738

$        (241)

$         9

$         9

$         25          $      23

(a)

Includes

(1)

the

business

aviation,

commercial

vehicle,

office

products,

construction

and

industrial

leases;

(2)

Canadian

lease

financing

portfolios;

and

(3) all remaining balances related to lease in, lease out; sale in, lease out; service contract leases; and (4) qualified technological equipment leases

(b)

Includes loans in Key’s consolidated education loan securitization trusts

(c)

Credit amounts indicate recoveries exceeded charge-offs

$ in millions

Exit Loan Portfolio

Exit Loan Portfolio

20

Three months ended

12-31-13

9-30-13

12-31-12

Tangible common equity to tangible assets at period end

Key shareholders’

equity (GAAP)

$

10,303

$

10,206

$

10,271

Less:

Intangible assets

(b)

1,014

1,017

1,027

Preferred Stock, Series A

(c)

282

282

291

Tangible common equity (non-GAAP) 

$

9,007

$

8,907

$

8,953

Total assets (GAAP)

$

92,934

$

90,708

$

89,236

Less:

Intangible assets

(b)

1,014

1,017

1,027

Tangible assets (non-GAAP)

$

91,920

$

89,691

$

88,209

Tangible common equity to tangible assets ratio (non-GAAP)

9.80

%

9.93

%

10.15

%

Tier 1 common equity at period end

Key shareholders' equity (GAAP)

$

10,303

$

10,206

$

10,271

Qualifying capital securities

339

340

339

Less:

Goodwill

979

979

979

Accumulated other comprehensive income (loss)

(d)

(394)

(409)

(172)

Other assets

(e)

91

96

114

Total Tier 1 capital (regulatory)

9,966

9,880

9,689

Less:

Qualifying capital securities

339

340

339

Preferred Stock, Series A

(c)

282

282

291

Total Tier 1 common equity (non-GAAP) 

$

9,345

$

9,258

$

9,059

Net risk-weighted assets (regulatory)

(e), (f)

$

83,251

$

82,913

$

79,734

Tier 1 common equity ratio (non-GAAP)

(f)

11.23

%

11.17

%

11.36

%

Pre-provision net revenue

Net interest income (GAAP)

$

583

$

578

$

601

Plus:

Taxable-equivalent adjustment

6

6

6

Noninterest income (GAAP)

453

459

439

Less:

Noninterest expense (GAAP)

712

716

734

Pre-provision net revenue from continuing operations (non-GAAP)

$

330

$

327

$

312

GAAP to Non-GAAP Reconciliation

(a)

$ in millions

(a)

2Q13

and

1Q13

reconciliations

available

in

our

2Q13

earnings

press

release,

available

on

our

website:

www.key.com/ir

(b)

Three months ended December 31, 2013, September 30, 2013, and December 31, 2012 exclude $92 million, $99 million, and $123 million,

respectively, of period end purchased credit card receivable intangible assets

(c)

Net of capital surplus for the three months ended December 31, 2013 and September 30, 2013

(d)

Includes net unrealized gains or losses on securities available for sale (except for net unrealized losses on marketable equity securities), net gains

or losses on cash flow hedges, and amounts resulting from the application of the applicable accounting guidance for defined benefit and other

postretirement plans

(e)

Other assets deducted from Tier 1 capital and net risk-weighted assets consist of disallowed intangible assets (excluding goodwill) and deductible

portions of nonfinancial equity investments.  There were no disallowed deferred tax assets at 12-31-13, 9-30-13, and 12-31-12

(f)

12-31-13 amount is estimated

21

GAAP to Non-GAAP Reconciliation

(a)

(continued)

$ in millions

(a)

2Q13

and

1Q13

reconciliations

available

in

our

2Q13

earnings

press

release,

available

on

our

website:

www.key.com/ir

(b)

Three months ended December 31, 2013, September 30, 2013, and December 31, 2012  exclude $96 million, $103 million and $126 million,

respectively, of average ending purchased credit card receivable

intangible assets

Three months ended

12-31-13

9-30-13

12-31-12

Average tangible common equity

Average Key shareholders' equity (GAAP)

$

10,272

$

10,237

$

10,261

Less:

Intangible assets (average)

(b)

1,016

1,019

1,030

Preferred Stock, Series A (average)

291

291

291

Average tangible common equity (non-GAAP)

$

8,965

$

8,927

$

8,940

Return on average tangible common equity from continuing operations

Net

income

(loss)

from

continuing

operations

attributable

to

Key

common

shareholders (GAAP)

$

229

$

229

$

190

Average tangible common equity (non-GAAP)

8,965

8,927

8,940

Return on average tangible common equity from continuing operations (non-GAAP)

10.13

%

10.18

%

8.45

%

Return on average tangible common equity consolidated

Net income (loss) attributable to Key common shareholders (GAAP)

$

224

$

266

$

197

Average tangible common equity (non-GAAP)

8,965

8,927

8,940

Return on average tangible common equity consolidated (non-GAAP)

9.91

%

11.82

%

8.77

%

Cash efficiency ratio

Noninterest expense (GAAP)

$

712

$

716

$

734

Less:

Intangible asset amortization on credit cards (GAAP)

7

8

8

Other intangible asset amortization (GAAP)

3

4

4

Adjusted noninterest expense (non-GAAP)

$

702

$

704

$

722

Net interest income (GAAP)

$

583

$

578

$

601

Plus:

Taxable-equivalent adjustment

6

6

6

Noninterest income (GAAP)

453

459

439

Total taxable-equivalent revenue (non-GAAP)

$

1,042

$

1,043

$

1,046

Cash efficiency ratio (non-GAAP)

67.4

%

67.5

%

69.0

%

Adjusted cash efficiency ratio

Adjusted noninterest expense (non-GAAP)

$

702

$

704

$

722

Less:

Efficiency initiative and pension settlement charges (non-GAAP)

24

41

16

Net adjusted noninterest expense (non-GAAP)

$

678

$

663

$

706

Total taxable-equivalent revenue (non-GAAP)

$

1,042

$

1,043

$

1,046

Adjusted cash efficiency ratio (non-GAAP)

65.1

%

63.6

%

67.5

%

22

Tier

1

Common

Equity

Under

the

Regulatory

Capital  

Rules (estimated)

(a)

KeyCorp & Subsidiaries

$ in billions

Quarter ended

Dec. 31, 2013

Tier 1 common equity under current regulatory rules

$                    9.3

Adjustments from current regulatory rules to the Regulatory Capital Rules:

Deferred tax assets and PCCRs

(b)

(.1)

Tier 1 common equity anticipated under the Regulatory Capital Rules

(c)

$                    9.2

Total risk-weighted assets under current regulatory rules

$                  83.3

Adjustments from current regulatory rules to the Regulatory Capital Rules:

Loan commitments <1 year

.9

Past Due Loans

.2

Mortgage servicing assets

(d)

.6

Deferred tax assets

(d)

.2

Other

1.5

Total risk-weighted assets anticipated under the Regulatory Capital Rules

$                  86.7

Tier 1 common equity ratio under the Regulatory Capital Rules

10.6

%

(a)

Tier 1 common equity is a non-generally accepted accounting principle (GAAP) financial measure

that is used by investors, analysis and bank

regulatory agencies to assess the capital position of financial services companies; management reviews Tier 1 common equity along with other

measures of capital as part of its financial analyses

(b)

Includes the deferred tax asset subject to future taxable income

for realization, primarily tax credit carryforwards as well as the deductible portion of

purchased credit card receivables

(c)

The anticipated amount of regulatory capital and risk-weighted assets is based upon the federal banking agencies’

Regulatory Capital Rules (as

fully phased-in on January 1, 2019); Key is subject to the Regulatory Capital

Rules under the “standardized approach”

(d)

Item is included in the 10%/15% exceptions bucket calculation and is risk-weighted at 250%

Table

may

not

foot

due

to

rounding

23